Crypto to Cash: The Hidden Fees and Taxes

Turning your cryptocurrency into cash can be a straightforward process once you understand how it works. When buying crypto, it's easy to transfer funds to an exchange or wallet with just a few taps. However, getting that cash back out and into your bank account is where things get more complicated.

The basic route involves selling your crypto for pounds on a platform that supports it, withdrawing the cash balance to your linked bank account, and waiting for it to clear. Sounds simple, but there are several factors at play here, including fees and taxes.

Exchanges charge trading fees when you sell crypto, which can range from 0.1% to 1.5%. There's also a spread, or the gap between buy and sell prices, which can be hidden in some cases. Withdrawal fees are charged to send cash to your bank, and network fees apply if you first move crypto between wallets.

It's essential to note that selling crypto is a taxable event, regardless of whether you move the money to your bank afterwards. In the UK and many other countries, capital gains tax may be applicable on any gain between what you paid for the crypto and what you sold it for.